If you’re a first-time homebuyer, or you’re selling your current home but don’t have a lot of equity built up, saving 10 or 20% (or even 5%) of the value of your next home can seem like a tall order. Fortunately, you may have another option.
Federal Housing Administration (FHA) to the rescue
FHA-backed mortgages still feature a 96.5% loan-to-value option, meaning that you can borrow as much as 96.5% of the value of the home you’re buying. And, your 3.5% down payment can come from a family member or your employer (“gifted” down payments are typically not allowed by conventional lenders).
They’re called “FHA-backed mortgages” because the FHA doesn’t actually lend the money; instead, the loan is underwritten by an FHA-approved lender and insured by the FHA (so that if the borrower defaults, the FHA pays the lender). It’s all done through what’s called the 203(b) Mortgage Insurance program. Some key notes about it:
- You’ll pay a mortgage insurance premium, part of which is required up front and part of which you’ll pay annually. You can finance the upfront mortgage insurance premium into the mortgage.
- You have to meet standard FHA credit qualifications, though they’re often more relaxed than conventional mortgage qualifications. Qualifications include not having a bankruptcy or foreclosure on your record within the last three years.
- The amount of the loan is limited and new changes to loan limits take effect October 1, 2011 (learn how the changes may affect your Las Vegas home purchase).
The state of Nevada also has several options that may help you purchase your Las Vegas home. The bottom line is that you might not need to squirrel away 5, 10, 15, or 20% of your next home’s value in cash. With an FHA-backed mortgage, you can buy a home with 3.5% down – and with the help from a professional agent, you can be in your new Las Vegas home sooner than you think.
To learn about your Las Vegas down payment options, please give Shelter Realty a call at (702) 376-7379 or to view our many affordable Las Vegas homes for sale, visit www.shelterrealty.com.